During the second quarter, the company also made infrastructure modifications that will help improve sales and profitability.

- The company added DSL capability in all possible stores to improve speed at the cash.
- The new ERP system in Germany was implemented, and this gives the firm the capacity to seamlessly move into any country.
- The company’s rebranding efforts are now 75% complete, and it expects to get the remaining allowable stores rebranded by the end of Q3.

Outlook

- The third quarter comparable store sales are expected to increase between 30% and 32%, driven by continued strength in next-generation hardware and a strong lineup of fall game titles.
- Diluted earnings per share for the third quarter are expected to range from 19 cents to 21 cents, as compared to 9 cents per share in the prior-year quarter.

- Based on the strong results experienced in the second quarter, the company is raising its full year 2007 EPS guidance to range from $1.45 to $1.48, with sales and same store sales expectations increasing to 20% to 22%, and 15% to 17% respectively.

While the firm was disappointed that the Grand Theft Auto IV has moved into next year, the back half is shaping up very well with titles that will fill the void. Halo 3, for example, for the Xbox 360 will reach an all-time high in reservations at GameStop, and expect that it will break all sales records here. The firm expect Madden, all formats, to beat last year''s numbers, and it is off to a good start. Guitar Hero 3 for the PS2, PS3, 360, and Wii will be one of the quarter''s best, and Legend of Zelda Hourglass for the DS will be the best-selling DS title. Heavenly Sword and Lair for the PS3 are proprietary titles for that platform that will sell well, and the firm believes that will help drive PS3 sales even further. The sales of all hardware systems will continue to do well in Q3, thus increasing the installed base.

Key questions and answers from the second quarter fiscal 2007 earnings call conducted by GameStop Corp. on August 23, 2007.

Arvind Bhatia (Stern Agee): You mentioned GTA. Could you give some more perspective on how you view the shift into next year?

David Carlson: We believe that the games that are coming out in the third and fourth quarter will make up the majority of any missed GTA sales. Games like Call of Duty and Mass Effect and Assassin''s Creed will probably pick up because of the slip of Grand Theft Auto. In addition to that, in our forecast we probably did not originally forecast the strength of the Wii or the DS in the second half, so that will pick up some of it as well. Because of the slip, we did not change our second half forecast at all.

Richard Fontaine: As a matter of fact, one of the things that we were a bit concerned about is that we see a very high overlap in the core gamer segment of 360 users and users also of the Grand Theft Auto 4. One of our concerns was that with the price points being up there and the out-of-pocket for both of those at the same time, something in the order of $120 to $160, it would be very difficult for those players to come up with both games. By spreading these out, getting one in September of this quarter and another early in 2008, I think is beneficial to us in the long run.

Arvind Bhatia: On the Wii and the DS, you mentioned that overall the company has continued to gain market share. Can you speak about the Nintendo platforms? Could you give some perspective on you gaining a disproportionate share on the Wii and DS because that is where it looks like some of the strength is coming from?

David Carlson: Our market share with Nintendo has continuously increased year over year over year for the last four or five years. I don''t know that we are getting a disproportionate share. I think we are getting a fair share given the size of the company we are, and the tie ratios that we produce for Nintendo which are the best in the country. We''ve worked well with them in building our market share, and our market share has continuously increased and we expect that to continue.

Colin Sebastian (Lazard Capital Markets): Could you talk about how the used business is trending relative to your expectations in terms of growth and margin and what do you expect there over the remainder of the year?

Dan DeMatteo: In terms of sales, we had 16% sales increase in the quarter, which we consider good, considering that new games grew 50%. The used video game sales will never increase like new video game sales and are more steady in their growth rates.

Our used margin rate in this quarter was impacted by increased spending on refurbishment. We have intentionally been ramping up our capabilities to fix next-generation hardware and handheld systems and instructing our stores to intentionally buy back defective units. As a result, we have doubled our refurbished hardware production over the prior-year quarter. Our used game sales benefited in Q2 and will again benefit in Q3 because of this refurbishment activity. This is intentional on our part because the margins on new video game hardware is very slight, and our margins on refurbished hardware is much greater.

Colin Sebastian: You mentioned in your comment some of the shift to more casual titles such as Boogie. Do you think you will be able to maintain your share of software if more of the market shifts that way?

Richard Fontaine: That certainly is a very positive challenge that we have. The business was built predominately serving the core gamers. Over the last two years, we have begun to shift our marketing efforts, our trade efforts and also our display and merchandising efforts to draw in more of the casual customer, the mom-and-pop shopper as well. We will this year be challenged to do even a better job in terms of store layout, merchandising in our stores. I am very confident that our stores will be set up better than they ever have, which will give us along with the marketing that we intend to do, a very strong position in terms of drawing in that new customer.

Steve Morgan: The stores have been retooled to maximize space and to ensure the ease of shopping and a great customer experience with products larger than they have ever been, leading the way with the Guitar Hero and the Halo 3 Legendary. The new platforms of Wii and PS3 have been well assimilated into our model layout as well. New higher capacity fixturing, both on wall and floor have been utilized and the store staffing has, in the all-important key holiday period, been increased substantially in order to accommodate the anticipated increase in business. All in all, well set to serve every customer that comes through our doors.

Tony Gikas (Piper Jaffray): It looks like pricing has been holding up very well, consumer acceptance of these higher price points has been terrific and likely will through the end of the year. What are your thoughts on pricing for next year?

Dan DeMatteo: We think the $59.99 will hold up this year. I haven''t given it a whole lot of thought about next year, but I can''t imagine if it holds up this year what would be magical about why it wouldn''t hold up for quality, A+ titles next year.